The Pharmaceutical Journal Vol 263 No 7071 p779
November 13, 1999 Business

"We are ready for Wal-Mart," says Boots

The chairman of the Boots Co Plc (Lord Blyth of Rowington) defended the company at its half-year results presentation on November 4, saying that the threat to its position caused by the arrival of the giant American retailer Wal-Mart was overstated. "Wal-Mart is not here. It is a company called Asda which has a portfolio of stores which is skewed towards the north and which will be difficult to change. "There is this view that there is this huge ogre out in Bentonville [Wal-Mart's headquarters in Arkansas, United States] that is going to automatically transfer what it does in Sioux Falls, Iowa, to Bradford. Well, life is not like that." He also expressed the opinion that Wal-Mart's first European venture, in Germany, was "nothing to write home about".

Customers felt Boots the Chemists offered good value for money, the company said

Lord Blyth said that the threat of increased competition in Boots's core health and beauty market was not a new one. The company had been in competition with the supermarkets for years. He added that the company's market research indicated that its customers felt that Boots the Chemists offered good value for money through its high levels of personal service and its range of promotional offers, such as its Advantage loyalty card.
"Every day low pricing may be the only way that some retailers can approach the market," he said, "but it is not for us."
At the end of the day, only about 20 per cent of the company's sales were vulnerable to direct competition from Asda/Wal-Mart.
The company reported a small increase in its sales for the six months to September 30, with turnover rising from £2.46bn in the same period last year to £2.47bn. Pre-tax profits were £251.5m, compared with a loss of £74.7m in 1998 when the company was absorbing the loss on the sale of Do It All.
Sales at Boots the Chemists rose by 4.2 per cent to £1.86bn. Sales were up 1.4 per cent on a like-for-like basis. Dispensing sales rose by 9.4 per cent, giving Boots just over 13 per cent of the prescription market. Sales of over-the-counter medicines were up 3.6 per cent, with larger increases in vitamins and analgesics being offset by lower sales of cough and cold products over the summer.
Lord Blyth said that the company's trials of dental and chiropody services had both been successful. A further 50 dental practices were planned for 2000. A decision on new chiropody practices would be taken shortly, he said, but any expansion of this business would on a smaller scale. In addition, he described the company's decision to open more edge-of-town stores as a "no-brainer" considering how successful the existing 44 stores had been. Cannibalisation of sales from its high street stores had been less than had been expected.
At September 30, Boots the Chemists had 1,385 stores, including 27 in Ireland, and Boots Retail International had 46 stores in the Netherlands, Thailand and Japan.